US Retailers Feel Like Targets, Even as Breach Rates Drop

Half of US retailers in a recent survey by 451 Research have experienced a data breach at some point—and the majority (88%) consider themselves vulnerable to data threats.

Another fifth of respondents in the 2017 Thales Data Threat Report, Retail Edition (19%) said they feel “very” or “extremely” vulnerable—likely due to the seemingly ongoing and much-publicized incidents in this space. But the "sitting duck" mentality is also driven by increasing digital transformation and complexity. According to the report, 95% of US retail organizations will use sensitive data in an advanced technology environment (such as cloud, big data, IoT and containers) this year. However, 53% of respondents believe that sensitive data use is happening in these environments without proper security in place.

The report also found that US retailers may be failing to learn from past mistakes; more than half (11%) of the 19% that were breached this year had also experienced a breach previously. This is exacerbated by budget misallocation, the report concluded.

About three-quarters (77%) of US retail organizations are increasing IT security spending, but are not concentrating spending where it will make the most difference. A majority (88%) of respondents selected network security as ‘very’ or ‘extremely’ effective at protecting data from breaches—even as network security fails to keep out attackers and is unable to protect data that is increasingly stored in the cloud. Spending patterns also indicate a focus on what has worked in the past with the planned spending increases on network (67%) and endpoint (63%) protection. Data-at-rest approaches, which have proven to be effective at protecting the data itself, came in second from last (49%) in terms of retailer security spending priorities.

“First, the good news: Only 19% of US retail respondents reported being breached last year, significantly less than the global average,” said Garrett Bekker, principal analyst for information security at 451 Research. “However, breach results were not so rosy for global retail—a staggering 43% of global retail respondents reported a breach in the past year alone, approaching twice the global average. These distressing breach rates serve as stark proof that data on any system can be attacked and compromised. Unfortunately, organizations keep spending on the same security solutions that worked for them in the past, but aren’t necessarily the most effective at stopping modern breaches.”

On the positive side, the report did find there to be year-over-year breach rate improvement. Encouragingly, US retail incidents dropped from 22% in the 2016 survey to 19% this year. This number is lower than any other US vertical polled for the 2017 report, including healthcare (20%), financial services (24%) and the federal government (34%).

“It’s encouraging that yearly retail data breach rates have finally started to drop, but rates are still quite high,” said Peter Galvin, vice president of strategy at Thales e-Security, which sponsored the report. “With tremendous sets of detailed customer behavior and personal information in their custody, retailers are a prime target for hackers so should look to invest more in data-centric protection. And as retailers dive head first into new technologies, data security must be a top priority as they continue to pursue their digital transformation.”